Answer :
If he leases.
$600 (for security deposit) + (450 x 36) for closed end lease
$600 + $16,200
Lease cost = 16,800
If he buys.
$2,400 (for down payment) + (515 x 36) for closed end lease + 1,080 (for 6% tax)
$2,400 + $18,540 + $1,080 = $22,020
Purchase cost = $22,020
After selling at the residual value of $6,500
Purchase cost minus Residual value
$22,020 - $6,500
=$15,520
So, if he leases he will not be able to have the residual value and he'll be spending more than if he buys. he'll actually be making a loss of $1,280.
Final thought: HE SHOULD BUY!
$600 (for security deposit) + (450 x 36) for closed end lease
$600 + $16,200
Lease cost = 16,800
If he buys.
$2,400 (for down payment) + (515 x 36) for closed end lease + 1,080 (for 6% tax)
$2,400 + $18,540 + $1,080 = $22,020
Purchase cost = $22,020
After selling at the residual value of $6,500
Purchase cost minus Residual value
$22,020 - $6,500
=$15,520
So, if he leases he will not be able to have the residual value and he'll be spending more than if he buys. he'll actually be making a loss of $1,280.
Final thought: HE SHOULD BUY!
[tex]the\ lease:\\\\ \$450\cdot36(payments)- \$600(security)=\$16,200-\$600=\$15,600 \\\\ the\ purchase:\\\\down\ payments+payments+sales\ tax- residual\ value= \\\\=\$2,400+\$515\cdot36+\$1,080-\$6,500=\$2.400+\$18,540-\$5420=\\\\=\$15,520\\\\\$15,520<\$15,600\\\\Ans.\ the\ best\ strategy\ for\ Damien\ is\ the\ purchase\ of\ the\ car.[/tex]